Business Plan Financial Projections

YOUR FINANCIAL BACKERS are interested in their investment. To them, the heart of your business plan is represented by the financial projections which must include income statements, balance sheets, and cash flow statements. These statements must convince your backers of two very important details: your business will generate enough cash to (1) repay your backers and (2) fuel your incentive to succeed.

THE BALANCE SHEET is a statement of financial position that shows total assets = total liabilities + owners' equity. Financial position refers to the amount of resources (i.e., assets) and the liabilities of the business on a specific date. Owners' equity is the residual interest, or the amount of the assets to which the owners have claim because creditor claims (liabilities) legally come first. Owners' equity in a business derives from two sources: (1) paid-in capital, which is the investment of cash or other assets in the business by the owner or owners; and (2) retained earnings, which are the accumulated profits of the business less the losses and withdrawals. The purpose of the balance sheet is to report the financial position of a business at a particular point in time.

REVENUE does not necessarily mean receipt of cash, and expense does not automatically imply a cash payment. Net income and net cash flow (cash receipts less cash payments) are different. For example, taking out a bank loan generates cash, but this cash is not revenue since no merchandise has been sold and no services have been provided. Loan repayments consume cash, but do not reduce income - they are recorded as a reduction to liabilities. In our income statement example (above), although net income for Year 1 was $33,194, cash flow was $77, 547. The beginning cash balance in Year 1 was $33,150. Cash flow in Year 1 was $77,547. Add the two, and the ending cash balance in Year 1 becomes $110,697. Your statements "tie together." This is a simple check potential investors or lenders will perform.

YOUR BUSINESS PLAN financial projections are the heart and soul of your operation and the most important set of documents you will provide a lending institution or potential investor.

Can you explain the underlying assumptions behind every number on every line of every financial statement in your business plan? We can. If you work with us, you can too.

The Business Plan Store will prepare detailed financial projections for your business that express your vision in terms of dollars and units of time, and in a format that is easily understandable to people in the lending industries. If you want to see them:

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WE ARE professional business plan writers.

YOUR FINANCIAL BACKERS are interested in their investment. To them, the heart of your business plan is represented by the financial projections which must include income statements, balance sheets, and cash flow statements. These statements must convince your backers of two very important details: your business will generate enough cash to (1) repay your backers and (2) fuel your incentive to succeed.

THE INCOME STATEMENT is designed to report the profit performance of a business entity for a specific period of time, such as a year, quarter, or month. Profit, or net income, represents the difference between revenues and expenses for the specified period. An income statement presents the results of operations; that is, it reports, for a specific period of time, the items that comprise the total revenue and the total expense and the resulting net income.

REVENUE does not necessarily mean receipt of cash, and expense does not automatically imply a cash payment. Net income and net cash flow (cash receipts less cash payments) are different. For example, taking out a bank loan generates cash, but this cash is not revenue since no merchandise has been sold and no services have been provided. Loan repayments consume cash, but do not reduce income - they are recorded as a reduction to liabilities.

THE STATEMENT OF CASH FLOWS or CASH FLOW STATEMENT is required by users of financial statements for information concerning the investing and financing activities of a business. The cash flow statement accompanies the income statement and balance sheet to communicate to the user information about the inflows and outflows of cash.

We have examples of financial statements on our website which can be viewed on a large screen at TheBusinessPlanStore.com.

The Business Plan Store will prepare detailed financial projections for your business that express your vision in terms of dollars and units of time, and in a format that is easily understandable to people in the lending industries.